Cattlemen rustle up debate on farm bill

An amendment in the U.S. Senate’s version of the 2002 farm bill that sets limits on meatpacking firms owning slaughter cattle would be a small victory for Mike Callicrate and like-minded cattlemen.
But others on the opposite side of the political pasture want to see that proposed ban eliminated when the House and Senate compete for a final product in a conference committee.

Both sides might be waiting for Rep. Jerry Moran, R-Kan. (an expected conferee), to take a position. Proponents of the ban figure he’s on their side, but the indication from Moran’s staff is that he’s “continuing to gather information” and has yet to commit to either side.

Callicrate and his supporters claim that when meatpackers own slaughter cattle for more than 14 days before they’re slaughtered, it depresses cattle prices. That’s because on a given day, those cattle held by the packers reduce the number of cattle in the daily market that producers can sell for slaughter.
Those who oppose the ban say allowing packers to own cattle gives them a steady supply of animals. To limit ownership, they claim, would drive up costs for some packers, which eventually would reduce cattle prices.

“(Packers) want to buy cattle as cheap as possible, and with the captive supply cattle they own, they don’t need cattle in the competitive market as much as they would otherwise,” said Callicrate, a cattle feedyard owner from St. Francis and an activist who is fighting corporate control of agriculture and concentration of ownership in the beef industry.

“(The ban) is a tiny little step in trying to restore competitive markets.”
He said the proposed 14-day ban is an arbitrary figure that “caught on” during the debate. He would prefer it to be seven days.
Defeating the limit on packer ownership would be good news to the Kansas Livestock Association, which boasts 7,000 members.

“It eliminates the cattle producers’ freedom of choice to market cattle as they see fit,” said Todd Domer, director of communications for the Topeka-based group.
The livestock association also is concerned that language in the amendment to the Senate farm bill might prevent marketing agreements between producers and packers.
Industry undecided

The industry is split on the issue. Manhattan-based Kansas Farm Bureau supports some of the amendment.

“We have been supportive of the ban,” as it relates to packer ownership, said Patty Clark, public policy director. But Farm Bureau wants producer endeavors protected.
“We would like to receive assurances that producer-based initiatives that involve value-based marketing be exempted,” she said.

Those endeavors are protected, said Mike Schultz, a cow-calf producer from Brewster and president of the 770-member Kansas Cattlemen’s Association.
“You can still contract cattle. You can still set prices on cattle. Farmer-owned cooperatives are exempt (from the ban),” he said. “If those alliances are such a good deal, you find producers who are truly capturing the benefit.”

Alliances tend to pit ranchers against their neighbors, Callicrate said, and the profits don’t make it back to the ranch.

“A combination of concentration and consolidation in packing and retail food distribution, along with anti-competitive practices,” he said, “have cost cattlemen more than $400 per head of their share of the consumer beef dollar.

“I’m not against a big feedyard, a big packer or big retailers. I’m against big, bad and abusive.”
Some plants could close

Without some packer involvement in livestock production, some plants might be forced to close, said Gary Mickelson, manager of communications for IBP, a division of Tyson Foods, based in Dakota Dunes, S.D. IBP owns beef processing plants at Holcomb and Emporia in Kansas.
Mickelson said IBP is not interested in being a “big player in the livestock feeding business,” but he said limiting packer ownership is another government regulation “that will produce unintended consequences that will be detrimental to the livestock industry.”

IBP doesn’t court marketing relationships with producers, he said.

“All contracts have been initiated by livestock producers looking for a new, more efficient way of marketing their animals,” Mickelson said. “In some cases, their lenders require it.”

Low cattle prices in some regions
A ban ultimately could result in low cattle prices in some regions, said Jim Mintert, a Kansas State University agricultural economist. It is against the trend of vertical integration, he said.
Vertical integration is owning more links in the value-added chain. In this case, the packers who turn live cattle into beef products also own the animals. They achieve benefits from both markets.
Callicrate is all for value-added agriculture. But by controlling some of the live market, packers are depressing prices and adding to their profits at the expense of cattlemen, he said.

But packers don’t own that many cattle. In a Jan. 18 report, Mintert and other economists wrote that in 1998, the largest 15 packers owned 3.7 percent of the steer and heifer slaughter.
If that’s true, Callicrate said, such a small amount shouldn’t matter to the packers.

Mintert said there is no research that supports Callicrate’s claim that packers owning cattle longer than 14 days has had a negative effect on cattle prices.

Further, Mintert said, the ban would “be detrimental to both producers and consumers.”
Callicrate said the ban sides with his attempt to abolish captive supply — holding livestock out of the cash market — and let the supply and demand dictate price.

“It goes after the new form of captive supply, and that’s packer ownership,” said the owner of Callicrate feeders, a 10,000-head feedlot near St. Francis, and that’s a hit on the big packers such as Tyson, Smithfield, Seaboard, Cargill and ConAgra.

“Never before in history have consumers paid more for beef. Never before have cattle producers seen less of that consumer dollar,” he said.
Lobbyists expected to converge

The beef industry has been battling poultry for market share. Alliances that have formed among cattlemen and packers, and the associated “branded products,” has helped to recapture some of the market beef lost to chicken in the 1980s and 1990s, said Jim Meetz, owner of Lane County Feeders, Dighton, and a former Kansas Livestock Association president.

Those efforts would be challenged by limiting packer ownership of animals, he said.
“You’re taking about a 30-year step back,” he said.

“We’ve got to get into the mode that we’re producing food. We’ve got to do everything we can to get back to the center of the plate, and you can’t do it with a bunch of individuals.”
Callicrate expects lobbyists to converge on the House-Senate conference committee when it convenes as early as next week, and he figures those who oppose the ban have “already turned their troops loose to try and kill it.”

But he remains hopeful and realistic.

“A ban on packer ownership would never go on its own,” he said. “Tied to the farm bill, it’s got a chance.”

The cattleman is pinning some of his hopes on Moran, who some expect to be appointed to the conference committee.

Moran could not be reached for comment for this story. Travis Murphy, his press secretary in Washington, said the packer ownership ban “came up several times on both sides” during his seven stops in northwest Kansas.

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by John Munsell | Oct 11, 2011
OpinionEditor's Note: This is the first part in a series written by John Munsell of Miles City, MT, who explains how the small meat plant his family owned for 59 years ran afoul of USDA's meat inspection program. The events he writes about began a decade ago, but remain relevant today.

They say that confession is good for the soul. I've been involved in a series of ugly events since my plant in 2002 recalled 270 pounds of ground beef contaminated with E.coli O157:H7 and now want to admit the embarrassing truth for public review.
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